News background and trading ideas for 25/01/2019

25 janv. 2019

Yesterday was definitely not the best day for the euro, and this is not about the outcomes of the ECB meeting. In this regard, everything was expectable and predictable, albeit Dragis’ statements were quite dovish. The main issue of the Eurozone recently is extremely weak macroeconomic statics. Yesterday another portion of data was published, which showed that business activity in the Union is on the verge of decline, and in some places is already falling. In particular, PMI in the manufacturing sector in Germany came out at 49.9 (forecast 51.5), which signals in favor of recessionary processes. In France the situation is even worse, Composite PMI was 47.9 with a forecast of 51.0.

Nevertheless, we will take it slow and not sell the EURUSD pair, at least because the US dollar, which is a component of this pair, and is in even more unpleasant situation: the shutdown continues, they have not reached a compromise, and investors are increasingly afraid of its consequences.
The pound continues to please us and increase. This time, the rumors that the Democratic Unionist Party expressed its readiness to support the new plan for Brexit Theresa May was the reason. Despite the maximum values of the pound against the dollar over the past 2.5 months, we continue to recommend its purchases - the growth potential is far from exhausted.

Oil, meanwhile, can’t make up its mind about the direction of movement. On the one hand, data on oil reserves in the US from API showed a sharp increase (+6.5 million barrels), as well as official statistics from the Ministry of Energy (recorded reserves growth of almost 8 million barrels), are pulling the asset down. On the other hand, the revolutionary events in Venezuela are perceived by traders with concern. In this regard, we recommend working very delicately intraday with small stops. The basic direction is sales.

Another commodity asset, which looks pretty reversible, is gold. Since the resistance of 1194 has shown excellent resilience, we recommend focusing on looking for points for asset sales, while gold prices are below 1194. The breakdown of this resistance will be a very strong signal in favor of purchases.

The Russian ruble is clearly aimed at a test of support 65.50. We take it strengthening as an excellent opportunity for more expensive sales and recommend buying a pair of UDRUB from current ones with the addition of around 65.50. As long as the pair ranges above this point, we see no perils for purchases, but only exceptional opportunities for gaining. The deal parameters are the following: stops below 64.80, and profits at least in the area of 66.80, but you can be even more ambitious and place profit-taking orders in the area of 69.50.